Analyst Note| Matthew Dolgin, CFA |
We give CyrusOne’s management significant credit for transparency and a willingness to take seemingly every question from the general public during its virtual investor day. However, we gained little new insight, and the story management told to promote its opportunities and the unique value CyrusOne offers was the same one it has consistently conveyed for several years. In addition, the plan for EBITDA margin expansion was offset by a dour view on pricing. We saw nothing to change our view that CyrusOne does not have a moat, and we are maintaining our $66 fair value estimate. The stock popped last week following the news that Blackstone intends to acquire data center firm QTS. Private equity’s desire for communications infrastructure firms persists at prices we believe are too high, but that environment will likely keep a floor under the stock. Nonetheless, on an intrinsic basis, we believe the stock is overvalued.